Snyderman: Today, in the Rose Garden ceremony, you talked about the need to buck up. And it seems like it was a message to Congress. Are you concerned that your health care information — the message got derailed, a little bit ...

Obama: Well, obviously, when I'm in the country, I am able to communicate a little more directly to the American people, and when I'm not, you know, those who want to defend the status quo are getting their message out more effectively.

And I think, though, Congress, overall, has been making extraordinary progress. We are closer than we've ever been to fundamental reforms that provide people choice, make health care affordable, and solve some of these long-term structural problems that — that inhibit quality care.

So — so I'm optimistic, but I also understand this is a big deal, a big issue.

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Obama: Well, let me — let me talk about what I think the American people are going to have to do.

First of all, the American people have to recognize that there's no such thing as a free lunch. Right? So, we can't just provide care to everybody that has no cost whatsoever, you don't end up having to make any decisions.

So, obviously, we've got to have a system that controls costs, gives people choices, but makes sure that we're getting a good bang for the buck. And we've got to have the American people doing something about their own care.

Snyderman: So, self-responsibility.

Obama: So, self-responsibility is going to be critical. This is probably not going to be something that's legislated. But I tell you what, every business out there is going to be looking at their health care bottom line. And increasingly what you're going to see is that businesses are going to incentivize their employees to stop smoking, lose weight, get exercise, get regular checkups.

What we can do is we can encourage those companies that have those sorts of wellness-prevention programs. We can make sure that it's easier to find a primary care physician to get a regular checkup, that everybody has basic insurance. But the American people are going to have to participate in their own health.

Snyderman: The reality is the average American wants to order à la carte, but wants to pay for the blue plate special. So, we like what we like.

Obama: Well, I think it's true, but certainly it's because of a lack of information.

Snyderman: Is it really?

Obama: ... drug is just as good as a brand-name drug for a — if, then, they're happy to save money with the generic drug.

If, on the other hand, their doctors tell them the brand-name drug is the one to use, partly because maybe the drug manufacturers have taken the doctor to some junket somewhere, well, then, naturally they want to listen to their doctor.

So the question is, can we provide good information to doctors? Can we provide good information to patients?

Obama: If you only need one test, why do you want five tests?

Snyderman: That's going to be a — that's going to be a big deal.

Obama: Absolutely. If — if we know that the generic is cheaper, works just as well, why do you want the more expensive ... see cost savings and the American people are going to recognize that, you know, efficiency will pay off for them in the long term, not just for the system as a whole.

Snyderman: If you talk about history, how do you protect our small businesses from not falling under the crunch ... which is a real issue, obviously.

Obama: Well, that's what's happening now. We just had a report in the Wall Street Journal that small businesses are rapidly eliminating health care. They just can't afford it. And so what we have to do is compare doing nothing with doing something. Doing nothing, we're on the path where nobody who works for a small business is going to be getting health care out there because small businesses just can't afford it.

If we move forward on health care reform, then we can do a couple of things. We can help small businesses pool their employees so that they can get a better deal with insurance companies. We can make sure that the smallest companies are exempted from having to pay into the system, but you know, there are a lot of companies where 75 employees, 100 employees, they can afford to pay into a system so that all their employees are taken care of.

Snyderman: But the companies that, maybe, have 10 or 20 — would you allow them to pool?

Obama: There are going to be companies that have 10 or 20. I think that what we want to do is, instead of forcing them to buy health insurance for their employees if they can't afford it, provide them the option of a pool, give them tax incentives, give them the resources so that they can drive down costs, and I think a lot of them are going to choose to do so.

Snyderman: There is language, buzz words, that just seem to get under people's skin, a few of them: mandates. We mandate auto insurance. Why not mandate health insurance, universal health care; tax it, ration it, which I think is a big, you know, elephant that nobody wants to talk about in the room?

How do you change the language so that people don't wrestle, and we all recognize that ...

Obama: Well, I think that the most important thing for people to understand is that the system, as it is, is unsustainable. And if people understand that; if you look at the trend lines, where your premiums have doubled over the last nine years; your out-of-pocket costs have gone up 62 percent; the federal government is being bankrupt by Medicare and Medicaid — if you look at all these things, then you know that, just standing still, we are going to be overrun by health care costs.

Once the American people understand that, then it's a matter of us making intelligence choices.

I — I was opposed to the idea of an individual mandate, each person had to get health insurance, like car insurance.

Snyderman: But why?

Obama: I'm still — well, because my concern was, if we post a mandate, then people who couldn't afford it still would not have the ability to pay for the health insurance that was out there that was available, except now they were also being punished.

But I've changed my mind on this because what I've — was persuaded of was that, if we can phase this in so that we know there's affordable insurance out there — and, in fact, a lot of the uninsured are relatively young people who could be insured fairly cheaply — that that actually will drive down the cost for everybody.

So there's an example of, if the president of the United States can get educated on something and change their mind. I have confidence that the American people, when they get all the facts, will see that we can improve quality.

People will still have a choice of doctors and choice of plans. And over the long term, we're going to save everybody money.

Snyderman: If you can change your mind on that, would you consider changing your mind on taxing health care benefits so that everyone ponies up a little bit?

Obama: Well, you know, I have to tell you that I think the way that we are approaching it, the way I've suggested we approach it ... I'm very worried about people who are reliant on existing insurance plans suddenly being told, "You know what? You are going to have to change your insurance plan, even though you may have negotiated with your employer for that higher benefits. That's an out-of-pocket cost for you."

And what I've said is that the better way to do this is to finance most of reform through reallocating dollars that are already being paid into the system. And you know, you're hearing a lot of noise out there about this is a $1.2 trillion reform effort, or a $1 trillion reform effort. Actually, about $600,000 — $600 billion of that $1 trillion is money that's already being spent subsidizing insurance companies, subsidizing pharmaceutical companies, spending unwisely on health care through the government.

And if we took that $600 billion and reallocate it, then what we're really talking about is a cost of somewhere around $400 billion over 10 years, or $30 billion to $40 billion a year.

Snyderman: And budget neutral by the time...

Obama: Budget neutral. Won't add to the deficit. And, by the way, we'll get that $40 billion back by things like wellness and health I.T., etc.

The problem is, is that that money may come later, once all these changes and reforms are in place, so we're going to have to do something up front. I think the best way to do it is to lower the itemized deductions for people who make a lot of money — like me. And if we do that, we can pay for it. And ultimately, this will pay for itself.

Snyderman: Mr. President, I'd like to ask you about your new nomination for surgeon general. You've had two surgeons general nominees — Dr. Sanjay Gupta, high-profile, academic neurosurgeon, Dr. Regina Benjamin, under the radar, family practitioner in rural America. They seem on paper to be diametrically opposed.

Obama: Could I say, I have great respect for Sanjay Gupta, but I never nominated him.

The press nominated him. I never — you know, that was not — there were people who had suggested that he might make a good surgeon general. And I think, in fact, he could have made a good surgeon general. He's a very well-spoken person and a lot of the job of the surgeon general is to get a message out.

Snyderman: Did you pick the right person?

Obama: Oh, I'm confident I picked the right person. The — when you look at Dr. Benjamin's track record, she is a family physician who's worked in some of the toughest areas, in a diverse community of low-income people, a lot of under-insured, under very adverse circumstances. And yet, somehow, always made the best of it.